Profit at Guinness owner up over 6pc as sales of 'the black stuff' increase in Europe
Operating profit at Guinness owner Diageo rose by 6.1pc to £2.2bn (€2.5bn) in the six months to 31 December.
The performance was driven by strong organic growth, with organic operating profit increasing by 6.7pc, as higher marketing investment was more than offset by efficiencies from the productivity programme, Diageo said.
Net sales were £6.5bn, an increase of 1.7pc, with all regions contributing to the company’s organic net sales growth.
In Europe, net sales rose by 4pc largely driven by Britain and continental Europe.
Growth was broadly based across all key categories, but primarily driven by gin, where Tanqueray gained share in a growing category and Gordon's benefitted from the launch of its Pink variant. Meanwhile sales of Guinness were up 4pc.
In North America net sales were up 2pc on the back of a strong performance from spirits.
Meanwhile the company recorded net cash from operating activities of £1.2bn.
“We have delivered broad based improvement in both organic volume and net sales growth. We have increased investment behind our brands and expanded organic operating margin through our sustained focus on driving efficiency and effectiveness across the business,” Ivan Menezes, chief executive of Diageo, said.
Looking forwards, the company, whose brands include Smirnoff, Captain Morgan, Baileys, and Tanqueray, said that its financial performance expectations for the year remained unchanged.
“We are confident in our ability to deliver consistent mid-single digit top line growth and 175bps of organic operating margin improvement in the three years ending 30 June 2019," Mr Menezes said.